Pune: Bank to auction DSK Group's land at Balewadi in March

PUNE: The much-delayed action against the D S Kulkarni (DSK) Group has begun with the state-run Central Bank of India deciding to enforce the security it has on a Rs 108.84 crore loan granted to the beleaguered real estate company in 2014.

The action also brings into focus the many ways in which Kulkarni borrowed and the extent of his borrowings from banks and financial institutions.

The bank has decided to auction a parcel of Kulkarni’s land in Balewadi (Survey No 44, Hissa No 1A, 3B, 10B, 4 & 11) on March 8. It has set a reserve price of Rs 66.39 crore for the parcel and has issued a “sale notice” under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, (SARFAESI Act) 2002.

The bank took possession of the land in November last year after serving a demand notice in April. While the bank officials did not put a specific date to when the loan became overdue, it seems like Kulkarni stopped paying up from January 2017.

Corporate filings show that Kulkarni often borrowed along with his subsidiaries and then devolved the subsidiaries in case the group needed to borrow more.

In the case of the Central Bank loan, the borrower was the company’s education arm, DSK Global Education and Research, and the DSK Group was the guarantor. However, when DSK Global started returning losses, the group uncoupled it as its credit ratings came under risk.

“The company was then embarking upon the prestigious township project near Manjari in Pune, which would require sizeable funding... DSK Global could seriously dent the financial ability of the company to raise resources for all new projects. Hence it was decided to disinvest the company’s shareholding in DSK Global,” DSK Group said in its annual report.

It turns out that the group has borrowed close to Rs 300 crore from four financial institutions on behalf of its subsidiaries or with them.

In mid-2014, the group with DSK Global had borrowed Rs 140 crore from ICICI Bank and ICICI Home Finance Company Ltd “for the co-development of part of the project DSK Anandghan”. A little earlier the same year, it had borrowed Rs 30 crore from Tata Capital Housing Finance along with another subsidiary, DSK Worldman and DSKAC. It mortgaged properties and unsold units of its project, DSK Sadaphuli.

Similarly, in 2013, the group along with yet another subsidiary, DSKAA, borrowed Rs 38 crore from Kotak Mahindra Bank again by mortgaging properties and unsold units of another project, DSK Vidyanagari.

Kulkarni’s wife Hemanti and son Shirish were directors in all the subsidiaries.

Kulkarni had also given corporate and personal guarantees then to secure the loans, but bankers say those do not amount to much now. “What matters is how many securities we have. If they fetch a good value, we can make good on the outstanding loans,” said a banker in know of the Central Bank of India auctioning process.

It is not clear yet how much money ICICI Bank, Tata Capital Housing Finance and Kotak Mahindra Bank have recovered or when they intend to initiate action. The group has taken loans from other banks as well, which opens up a can of worms.

According to the group’s annual report of 2015-16, the outstanding amount of all the loans (as on March 31, 2016) was Rs 737.92 crores. The group has not filed any annual report since but this amount would obviously have ballooned over the last several months.